Finance Bill 2025-26 Committee of Whole House – Government raises IHT relief allowance but opposition amendment bids fail

Opposition MPs forced 11 votes during the two days of Committee of Whole House debate but the government won all of them comfortably thanks to its large parliamentary majority. The only changes made to the bill during the two days were government amendments increasing the combined allowance for inheritance tax agricultural and business property from £1 million to £2.5 million.

The parts of the bill debated at Committee of Whole House are selected by the largest opposition parties in Parliament – the Conservatives and the Liberal Democrats – and are generally the most contentious in the bill. The remaining clauses will be considered in Public Bill Committee, beginning 27 January.

Documents related to the Finance Bill – including the text of the Bill, government explanatory notes and the text of amendments – are available to view on the House of Commons website.

The CIOT produced four briefings for MPs on the clauses under discussion:

CIOT Finance Bill 2025-26 briefing – Income Tax – changes to tax rates for property, savings and dividend income
CIOT Finance Bill 2025-26 briefing – Inheritance Tax - Agricultural and business property reliefs
CIOT Finance Bill 2025-26 briefing – Inheritance Tax - Pension interests
CIOT Finance Bill 2025-26 briefing – Gambling duties

Additionally CIOT’s Low Incomes Tax Reform Group produced one briefing:
LITRG Finance Bill 2025-26 briefing – Basic rate limit and personal allowance for tax years 2028-29 to 2030-31

And CIOT’s sister body, the Association of Taxation Technicians, produced a further four briefings, which can be read here.

Points from the CIOT briefings were raised by shadow ministers during four of the six debates.

You can find more detail on each of the clauses debated in our Committee of Whole House preview.

Finance Bill 2025-26 Committee of Whole House Debate

Day One: Monday 12 January 2026
(full Hansard)

Group One: income tax charge and rates

Clause 1: Income tax charge for tax year 2026-27
Clause 2: Main rates of income tax for tax year 2026-27
Clause 3: Default and savings rates of income tax for tax year 2026-27
Clause 4: Increase in dividend ordinary and upper rates
Clause 5: Savings rates of income tax for tax year 2027-28
Clause 6: New rates of income tax on property income
Schedule 1: Property and savings rates of income tax: consequential amendments
Clause 7: Property rates of income tax for tax year 2027-28
Clause 8: Scottish and Welsh property rates set by Scottish Parliament and Senedd
Schedule 2: Scottish and Welsh property income rates

Four new clauses were tabled:

• Conservative new clause 10 would have required the Chancellor to make a statement on the impact of the increase in dividend rates on, among others, household saving decisions and the domestic equity market
• Conservative new clause 11 would have required the Chancellor to make a statement on the impact of the increase in savings rates on household saving decisions and outcomes for British savers and pensioners
• Conservative new clause 12 would have required the Chancellor to make a statement on the impact of the increase in property income tax rates on the private rental sector in each nation and region of the UK
• Lib Dem new clause 2 proposed a review of the impact of the increase of income tax on property income on rent prices

Debate

Opening the debate, Exchequer Secretary (XST) Dan Tomlinson framed the Bill as part of a wider Budget strategy aimed at “investment and renewal” rather than austerity. He noted that the Office for Budget Responsibility (OBR) has revised down productivity forecasts, reducing expected revenues by around £16 billion by the end of the forecast period.

He stressed that borrowing is forecast to fall in every year of the OBR forecast, describing this as the fastest reduction among G7 countries. The XST added that the tax measures in the Bill are designed to protect funding for public services while supporting living standards. “The Budget made fair and necessary choices that deliver on the public’s priorities and bring about the change that this government promise”, he said.

On clauses 1 to 3, the XST emphasised that income tax rates themselves are not being increased by this Bill. However, opposition MPs highlighted the impact of fiscal drag, with frozen thresholds meaning more people will be drawn into higher tax bands over time. While the XST acknowledged this, he said income tax remains the largest single source of government revenue, expected to raise around £359 billion in the coming year.

The XST explained that clauses 4 to 8 will raise the tax rates for property, savings and dividend income “to ensure that income from assets is taxed more fairly”. He said that in 2029-30, around two thirds of the revenue from the increases to the dividend, property and savings tax rates is expected to come from the top 20% of households, yielding £2.2 billion for the public purse.

“These changes will still ensure that those with the broadest shoulders contribute more,” he said.

Labour MPs backed the Bill, arguing that the tax system has failed to keep pace with changes in the economy, particularly the growing role of wealth relative to earnings. Dr Jeevun Sandher highlighted that while wealth as a share of GDP has doubled since the 1980s, taxes on wealth-related income have not risen proportionately.

“The income taxes in this nation are being levied on earners, not those who get their income from wealth,” he said. “That is why it is entirely right that… we tax dividends at a greater rate.”

But Conservative MPs strongly opposed the changes, describing them as a “savers’ tax onslaught” and warning of negative consequences for enterprise, investment and the private rental sector.

Shadow Financial Secretary Gareth Davies warned there would be “significant consequences” to dividends and savings, adding: “There is a double whammy tax on savers. It treats saving less like a virtue to be encouraged, and more like a habit to be discouraged.”

The XST rejected claims that the changes would disproportionately harm savers or pensioners, noting the continued availability of savings allowances and ISAs.

Jim Shannon (DUP) questioned whether the tax burden was truly being fairly shared: “the money is not coming from millionaires. It is coming from lower and middle-income families… some 4.8 million more individuals will be paying the higher rate and some 600,000 more will move into the additional rate band.” The minister countered that wealthier individuals would contribute through other measures, including changes to wealth taxes and estate taxes.

The Liberal Democrats focused on the increased complexity introduced by the new property income tax rates, noting that the Bill creates multiple new rates across different types of income. Lib Dem Treasury spokesperson Daisy Cooper said: “When taken together, clauses 4 to 8 add more complexity, and concerns have been raised by the Chartered Institute of Taxation and the Association of Taxation Technicians, which highlighted that the new property rates add five new income tax rates.”

She also pressed for impact assessments on rent prices and regional effects, arguing that without such analysis the government risks exacerbating the cost of living crisis for renters.

The only division was on Conservative new clause 12 (impact of the increase in property income tax rates on the private rental sector). It was defeated 167-350. Clauses 1-8 and schedules 1-2 were agreed without a vote. Other amendments and new clauses were not moved (ie not pressed to a vote).

Group 2: Freezing of allowances

Clause 9: Freezing starting rate limit for savings for tax years 2026-27 to 2030-31
Clause 10: Basic rate limit and personal allowance for tax years 2028-29 to 2030-31
Clause 69: Rate bands etc for tax year 2030-31

The following amendments and new clauses were tabled:

• Lib Dem amendments to remove all three of these clauses from the Bill
• Lib Dem new clause 3 to require HMRC to notify individuals who, as a result of the freezing of income tax thresholds in the Act, will pay income tax for the first time or move into a higher tax band
• Lib Dem new clause 4 to require the government to assess and publish a report on how the freezing of tax thresholds to 2030-31 impacts households at various income levels
• Lib Dem new clause 5 to require the government to assess how many people will be in each income tax bracket from 2026-27 through to 2030-31, together with comparative figures before and after that period
• Conservative new clause 13 to require the government to publish an assessment of the impact on the average earner of extending the freeze on the basic rate limit and personal allowance for the tax years 2028-29, 2029-30 and 2030-31
• Conservative new clause 14 to require the government to publish an assessment of the impact of the personal allowance on those pensioners whose only income is the state pension for the tax years 2027-28 to 2030-31
• Conservative new clause 15 to require the government to publish an assessment of the fiscal impacts of exempting pensioners whose sole income is the basic or new State Pension (without any increments) from paying small amounts of income tax

Debate

Dan Tomlinson, Exchequer Secretary (XST) framed the threshold freeze as a necessary and pragmatic choice. The purpose of tax reform, he argued, is not only to modernise the system and make it fair, but to raise the revenue required to fund public services, such as lifting hundreds of thousands of children out of poverty, cutting NHS waiting lists and easing the cost of living through measures such as energy bill support.

 He added that threshold freezes are a less damaging way to raise revenue than rate rises and are part of a broader package designed to ensure that “those with the broadest shoulders pay their fair share”. He said clause 10, which freezes the personal allowance at £12,570 and the basic rate limit at £37,700 for a further three years from April 2028, will raise around £7.8 billion in 2029–30 alone, 

Opposition MPs accused the government of breaking their manifesto promise not to raise taxes on working people. Shadow Financial Secretary Gareth Davies labelled it “a £23 billion broken promise”, adding: “920,000 more people will be pushed into the higher rate, and 780,000 more people will be pushed into income tax altogether.”

The shadow minister framed clauses 9 and 10 as part of a massive tax increase under Labour, and argued that these freezes would squeeze workers, pensioners and savers alike.

Other MPs raised concerns that individuals taking on extra hours or responsibilities would find much of their additional income taxed away, weakening incentives and harming productivity.

Several MPs pressed the XST on how the threshold freeze would interact with the rising state pension. The state pension is set to rise faster than frozen allowances, raising the prospect that pensioners could be drawn into income tax for the first time from 2027.

Addressing statements made by the Chancellor that those whose only income is the state pension will not pay income tax during this Parliament, Vikki Slade (Lib Dem) pointed out that this assurance does not appear anywhere in the Bill. Lib Dem Treasury spokesperson Daisy Cooper added: “In a recent meeting with the Chartered Institute of Taxation, it was highlighted to me that is not clear who will qualify for which rate of tax.” She continued that “pensioners who receive the same amount of income but from different sources could end up paying different rates of tax”. 

The XST assured the House that details of the state pension tax fix will be “set out later in the year”.

Clause 69, which extends the freeze on inheritance tax nil-rate bands into 2030–31, was criticised as further evidence of fiscal drag, gradually pulling more estates into taxation over time without explicit rate increases.

Both Daisy Cooper and Clive Jones (Lib Dem) were critical of so-called “stealth taxes”. Frozen thresholds, they argued, do not appear clearly on payslips, leaving many people unaware that their tax burden is rising. Vikki Slade drew attention to groups particularly affected by the freezes: apprentices on low wages, graduates facing frozen student loan thresholds, and pensioners with small private incomes. These groups, she said “do not have the broadest shoulders and instead feel completely targeted”.

Closing, the XST said opposition MPs, who “repeatedly voted to freeze thresholds until 2028 when they were in government”, are attempting to “rewrite history”. “We inherited a mess at the 2024 general election,” he added, “and the measures we are considering now… enable us to rebuild our public finances, to fund our public services for the long term and to get borrowing over the course of this Parliament to continue to fall.”

The only division on this group was on clause 10 stand part (freezing of ITPA and basic rate limit for another three years), which opposition parties opposed. The clause passed 324-180. Clauses 9 and 69 passed without a vote. Amendments and new clauses in this group were not moved.

Group three: Inheritance tax (APR and BPR)

Clause 62 and schedule 12 introduce new rules for inheritance tax to limit the amount of relief that is available on the value of qualifying agricultural property and relevant business property that is comprised in an individual’s estate or in a settlement (trust).

The following amendments and new clauses were tabled:

• Government amendments 24-29 to increase the 100% relief allowance for APR and BPR (and related allowances) to £2.5 million
• Conservative amendments 1 and 2 to remove this clause and schedule from the Bill
• Conservative amendments 3-23 to remove the transition period in respect of the changes to APR and BPR and delay the implementation date so that the changes would take effect for transfers made after 1 March 2027
• Lib Dem amendments 42-44 to maintain 100% BPR where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family
• Lib Dem amendments 45-47 to apply 100% BPR where the property was acquired before 31 March 2026
• Lib Dem amendment 48 to cause agricultural property to only be subject to IHT if, within 10 years of the relevant transfer, the agricultural land giving rise to the charge is either (a) sold (and the owner has not purchased agricultural land elsewhere), or (b) ceased to be used for farming
• Lib Dem amendment 40 to begin indexation of relief allowances in 2027 rather than 2031
• Lib Dem amendment 41 to require the relief allowance to rise in line with increases in the value of agricultural land if this is above inflation
• Lib Dem new clauses 6, 7, 16 and 17, to require various reports and assessments, including on the operation of the rules regarding share buyback in relation to APR (NC16), and on the merits of uprating the allowance for agricultural property annually by the change in the value of agricultural land (NC7)
• SNP amendments 31-36 to remove the transition period in respect of the changes to APR and BPR so that the changes take effect for transfers made from 6 April 2026
• Alliance Party of Northern Ireland new clause 1 to require the government to publish an assessment of the effects of the APR changes in Northern Ireland

Debate

The government defended its reformed approach to agricultural property relief (APR) and business property relief (BPR) in inheritance tax in the face of sustained pressure from farming communities and opposition parties calling for the changes to be scrapped entirely.

During a two and a half hour long debate, Exchequer Secretary (XST) Dan Tomlinson argued that the reforms strike the right balance between supporting family farms and businesses whilst ensuring the wealthiest estates contribute fairly to public finances. He said the government had tabled amendments to increase the threshold for 100% relief from £1 million to £2.5 million following representations from rural MPs and farming organisations.

Tomlinson told MPs that the reforms would affect even fewer estates now: "Only up to 185 estates across the UK claiming APR, including those also claiming BPR, are expected to pay more in the next tax year. This means that around 85% of such estates will not pay any more tax as a result of the changes in 2026-27."

Shadow Treasury Minister Gareth Davies mounted a fierce attack on the policy, describing it as a "family farm tax and family business tax" that the Conservative Party would "fiercely oppose." He questioned why it had taken the Treasury "more than a year to admit that it got this wrong," asking: "Why have farmers been forced to leave their fields and bring their tractors to Whitehall, just to be heard?"

Davies said his party’s amendments sought to mitigate the damage “by removing the anti-forestalling measures that have purposely tied the hands of so many farmers and business owners across our country. The Chartered Institute of Taxation and many others have pointed out that these measures particularly trap more elderly farmers, who have been robbed of their ability to plan. The government have said all along that they expect farmers and business owners to alter the ownership structure of their assets. I would be really interested to hear just how the Minister believes that elderly farmers, in particular those in the final few years of their life, should do that.”

The shadow minister also raised a number of practical issues brought to his attention by CIOT, including the difficulty some would have paying the tax: “The Chartered Institute of Taxation has warned that extending 10 annual interest-free instalments to APR and BPR property does not solve the problem; those instalments will still be a significant burden. In practice, it is unlikely that many families will be able to pay the tax without selling up.”

Additionally, “the Chartered Institute of Taxation has warned that schedule 12’s failure to allow allowances to be allocated to specific property could undermine many wills as currently drafted. This creates a tremendous amount of uncertainty, disputes and real hardship.”

Another Conservative, Robbie Moore, also raised practical concerns, asking how it was "fair that a family business in my constituency has already been told that its BPR liability will be more than £800,000? It employs 250 people in Keighley." Simon Hoare (also Conservative) urged the government to "pause and take some time to build consensus across the sector on the data and work out the trajectory of costs".

Liberal Democrat Treasury spokesperson Charlie Maynard congratulated farmers on forcing the government to rethink a "completely short-sighted and ill-thought-out policy." However, he argued the changes did not go far enough, questioning whether the revenue forecast would exceed the cost of administering the new policy.

He called for transitional gifting rules to support older farmers "who have done the logical thing of hanging on to their land, but who are now faced with penalties for doing so," noting that this had been suggested by CIOT.

Another Lib Dem, Helen Morgan, highlighted concerns about business property relief changes, sharing the case of Ridgway Rentals, a family-run plant hire company whose managing director told her the changes mean there is "no point in growing as a business" and believes "countless other businesses have either closed or been sold because of the Government's recent multifaceted attack on business in this country."

MPs from Northern Ireland were particularly vocal about the disproportionate impact on their farming communities. DUP MP Carla Lockhart stated: "An estimated 25% of farms in Northern Ireland fall above that threshold. Those farms are the backbone of our economy."

Alliance MP Sorcha Eastwood said that analysis by the Department of Agriculture, Environment and Rural Affairs in Northern Ireland showed that it could have pulled about 50% of Northern Ireland farms into inheritance tax compared with about 5% of estates generally across the UK.

Several Labour MPs from rural constituencies defended the reforms. Maya Ellis described the December announcement as "possibly the best Christmas present that I have ever received" and praised the government for "navigating the genuinely tricky balance between ensuring that the farming industry is not used to avoid tax, that our family farms are protected and encouraged to thrive, and that food security is protected."

Markus Campbell-Savours, the Labour MP who had the whip removed after voting against the original proposals, said it would be churlish of him not to thank the government for seeing sense whilst noting "this amendment falls short of the full U-turn I would have preferred."

Ruth Jones (Lab), Chair of the Welsh Affairs Committee, welcomed the changes, noting that "Welsh farms are typically smaller than those in England, with 55% being less than 20 hectares". She continued to call for a Wales-specific impact assessment.

MPs across parties raised the issue of indexation, with Traditional Unionist Voice MP Jim Allister warning that without index-linking, "in the past five years, land values have increased by 40%. If that trajectory continues for the next five years, in today's terms the threshold will be worth only £1.5 million."

The differential treatment based on ownership structures also drew criticism. Ben Maguire recounted meeting a constituent farmer who "is a sole trader slightly over the £2.5 million mark. We ended up discussing for more than 10 minutes whether he should marry his long-term partner to get away from this tax."

The anti-forestalling provisions were condemned by several MPs. SNP MP Seamus Logan stated that NFU Scotland president Andrew Connon had described the anti-forestalling clause as "morally indefensible. No tax policy should ever place a terminally ill farmer in the position of being financially better off dead than alive."

In closing, the Exchequer Secretary defended the government's approach, noting that the relief system in the 1980s "was less generous than the one that will be implemented in April" and that "the OBR confirmed at the Budget that the changes are not forecast to have a significant macroeconomic impact." He urged MPs to support the government's amendments whilst rejecting Opposition attempts to delay or further amend the provisions.

There were three divisions on this group: clause 62 (limiting APR/BPR) passed 344-181; Conservative amendment 3 (remove transition period and delay implementation date) was defeated 185-344; Lib Dem new clause 7 (look into uprating in line with rising farmland prices) was defeated 188-341.

As well as clause 62 itself, schedule 12 and the government’s amendments to it increasing the allowance passed. Other opposition amendments and new clauses were not moved.

Day Two: Tuesday 13 January 2026
(full Hansard)

Group Four: Inheritance tax (unused pensions)

Clause 63: Tax to be charged on certain pension interests
Clause 64: Liability for tax on pension interests
Clause 65: Withholding of benefits and payment of tax by pension scheme administrator
Clauses 66: Connected amendments to IHTA 1984
Clause 67: Connected amendments to income tax rules
Clause 68: Commencement of sections 63 to 67

The following amendments and new clauses were tabled:

• Lib Dem new clauses 18 and 19 would have required the government to report on the impact on personal representatives (NC19) and on a range of affected groups including HMRC (NC18)
• Lib Dem new clause 20 would have required the government to address delays in the payment of inherited pension pots by reviewing HMRC’s tax administration processes, with the aim of preventing prolonged waiting periods for bereaved families
• Conservative new clause 22 sought a statement on the effects of charging IHT on pension interests on pension saving levels, household saving decisions and personal representatives
• Conservative new clause 23 would have required the government to consult on the potential impacts of these changes
• Conservative new clause 24 would have required HMRC to publish comprehensive guidance on the implementation of these changes and establish a dedicated helpline for enquiries relating to IHT on pension interests

Debate

Opening the discussion, the Economic Secretary to the Treasury, Lucy Rigby, said the reforms would ensure pensions are used for their "core intended purpose" and would "remove long-standing inconsistencies and deliver on the government’s promise... to build a stronger and fairer economy". She emphasised that pension tax reliefs totalled £78.2 billion in 2023–24 and argued that such reliefs must not enable pensions to become vehicles for passing on wealth free of IHT.

Rigby explained that under current rules, unused pension funds in discretionary schemes often fall outside an individual’s estate, whereas non-discretionary schemes are subject to IHT.

Responding for the Conservatives, Shadow Exchequer Secretary James Wild warned that the measures could undermine efforts to encourage people to save. He warned that personal representatives would have to "identify every pension asset, calculate the inheritance tax due and ensure payment within six months", describing this as unrealistic, particularly where multiple or illiquid pension arrangements are involved.

“Both the Association of Taxation Technicians and the Chartered Institute of Taxation have offered some practical solutions, the first of which is to extend the withholding periods,” said Wild. “Personal representatives can ask pension administrators to withhold 50% of funds for up to 15 months, but that is simply not long enough for the complex cases I have referred to, particularly where business property valuations have to be agreed with HMRC. Will the minister consider allowing HMRC to extend withholding in such complex cases?”

Wild noted that both CIOT and ATT had criticised the government for consulting on pensions in isolation, rather than in the context of individuals’ wider inheritance tax position. Conservative new clause 23 was clear, he said. “Consultation must take place to assess whether these changes “deliver better outcomes for savers and pensioners” —wording that reflects the commitment the Labour party made in its manifesto.”

The shadow minister also raised concerns that illiquid pension assets, including commercial property, might need to be sold quickly at lower prices to meet tax deadlines. And he warned, again citing CIOT, that professionals may withdraw from acting as executors, leaving families with heavy administrative burdens. The complexity brought by this measure rendered the comprehensive guidance and dedicated helpline proposed by new clause 24 necessary, he explained.

Liberal Democrat Treasury spokesperson Daisy Cooper set out similar criticisms, saying the clauses seek to “shoehorn pensions legislation into tax legislation”. Also citing CIOT and ATT she highlighted the risk that personal representatives could be personally liable for IHT on pension funds that they "did not know about and could not reasonably know about", which, she warned, could lead to "costly and protracted litigation".

“If someone passes away before they have had the chance to consolidate their pension funds, tracking down the unused pots within six months of their death will be very difficult for executors and will mean that the initial IHT calculations could be wrong,” said Cooper. “The government must recognise that and amend this measure.”

She also raised concerns that beneficiaries might face delays of up to 15 months before receiving inheritances, noting the emotional strain such delays impose during bereavement.

Closing the debate, the Economic Secretary confirmed that regulations would be introduced to clarify information-sharing between pension schemes and personal representatives, and that HMRC guidance and helpline support would be available ahead of implementation.

Responding to concerns about the position of personal representatives, she said the changes that the Bill brings about “are consistent with the process that already exists for administering estates and paying any tax due”. She pointed to the changes announced at the Budget to mitigate the risks to personal representatives by providing them with the ability to direct pension scheme administrators to withhold taxable benefits for up to 15 months from the date of death and to make payments of inheritance tax directly to HMRC.

On delays in the payment in inherited pension pots caused by tax administration processes, the minister said that, “in the vast majority of cases, payments will be made as soon as pension schemes have completed their discretionary processes”. She spoke of the need for a fair balance between the beneficiaries of the pension and of the wider estate. Even when personal representatives take up the right to direct pension schemes to withhold half of the pension pot beneficiaries will still be able to access the other half as soon as their pension scheme is ready to pay, she pointed out. She added that the government would introduce regulations setting out deadlines for the parties involved to exchange information.

She dismissed the calls for reviews, saying the government already “keep all tax policies under review through the monitoring of returns and communication with representative bodies and taxpayer groups.”

Finally on the call for comprehensive guidance and a dedicated helpline the minister promised that the first of these would be available in advance of April 2027, with HMRC continuing to work with industry on shaping it. HMRC will also provide interactive tools to support personal representatives. There will be no separate helpline but staff on the inheritance tax helpline will be fully trained on each of the changes, she promised.

There were two divisions: the opposition parties opposed clause 63 but it passed 348-167; the Conservatives pressed their new clause 24 (comprehensive guidance and dedicated helpline) to the vote and it was defeated 184-331. Other opposition amendments and new clauses were not moved.

Group Five: Gambling duties

Clause 83: Rate of remote gaming duty (increases the rate from April 2026)
Clause 84: General Betting Duty on remote bets (introduces new rate that will apply to bets placed remotely from April 2027)
Clause 85 and Schedule 13: Abolition of bingo duty

Two new clauses were tabled:

• Lib Dem new clause 21 would have required the government to undertake an assessment of the impact of these changes in respect of the treatment of free bets and freeplays for calculating general betting duty on remote bets
• Conservative new clause 25 would have required the Chancellor to make a statement about the effects of the increase in gambling duties

Debate

Lucy Rigby, the Economic Secretary, put the changes in the Bill in the context of a shift from in‑person to online gambling and evidence of higher harm online: “Between 2015 and 2025, remote gambling grew by 80%, while land‑based gambling has declined by 10%… NHS figures show that over 40% of gamblers using online slots, bingo or casino games are considered to be at risk, compared with less than 15% of those betting in person on horseracing.”

The minister said increasing the rate on remote gaming more significantly would “reduce the incentive for operators to push customers towards higher harm products”. She also acknowledged the importance of bingo halls in communities, saying the government was “proud to back them with [abolition of bingo duty]”.

While Jim Dickson (Lab) welcomed the measure, Sir Gavin Williamson (Con) and Gareth Snell (Lab) – whose Stoke constituency includes Bet 365’s headquarters - raised concerns about gamblers being pushed towards the black market as a result of the changes.  Snell said there are people in his constituency “who will not have a job this time next year, either because the company that they work for will have to reduce the number of people who work for them, or—worst of all—will move overseas.”

In response, Rigby said that the illegal betting market in the UK is “relatively small”, adding that: the government will provide an additional £26 million to the Gambling Commission over the next three years to strengthen enforcement against the illegal market.

Snell also worried that a gaming rate to 40% would make the UK an outlier compared with other European countries. He worried that “we will get to a point where we are trying to squeeze an increasingly large amount of money out of a shrinking tax base because more people are taking their spend elsewhere”.

For the Conservatives James Wild expressed concern about the impact of tax changes on employment, noting that independent modelling from EY suggests a possible loss of 15,000 jobs from doubling remote gaming duty, with a further 1,700 jobs potentially lost as a result of the increase in general betting duty. The Shadow Exchequer Secretary also believed that, despite the government’s ‘climbdown’ in exempting horseracing from the higher rates, that industry “could still feel the consequences” through reduced sponsorship and partnerships.

While welcoming the measures, Daisy Cooper, Liberal Democrat Treasury spokesperson, asked the minister to explain why the new rate would apply to a narrower tax base – Gross Gambling Yield, which excludes the notional stake value of free bets and free plays – than the base used for existing remote gaming duty. This was an issue which the CIOT had raised in a briefing. She explained that her new clause sought to clarify the situation, emphasising the importance of being able to “clearly see” the impact of the changes.

Alex Ballinger (Lab) also supported the measures. He argued that: “Online slots and casinos are designed to be high speed, continuous, psychologically manipulative and, for many, overwhelmingly addictive… the decision to increase remote gaming duty… is absolutely the right thing to do.”

Dame Caroline Dinenage (Con), Chair of the Culture, Media and Sport Committee, supported the Conservative new clause and stressed a “careful balance: preventing harm for all, while allowing those who gamble safely the freedom to continue to do so”. She warned that “there is a risk that in reality [the Chancellor] will lose out on the tax receipts from up to £6 billion diverted back to the black market”.

Responding to concerns, the minister highlighted that the Office for Budget Responsibility expects that employment levels will rise every year of the forecast. Pressed by Daisy Cooper on why a smaller tax base was being used for the new rate she did not answer directly but stressed that the government is not proposing to make any changes to the treatment of free plays and free bets through the Bill.

These clauses were passed without a division. The house divided on Conservative new clause 25 (statement about the effects of the increase in gambling duties), but it was defeated 187-351. The other new clause was not moved.

Group Six: alcohol duty

Clause 86: Rates of duty (increases rates of alcohol duty in line with RPI inflation)

Three new clauses and an amendment were tabled:

• SNP amendment 30 to remove this clause from the Bill
• Lib Dem new clauses 8 and 9, seeking reports on the impact on the hospitality sector of this measure (NC8) and fiscal changes generally (NC9)
• Conservative new clause 26 would have required the Chancellor to make a statement about the effects of the increase in alcohol duty

Debate

Economic Secretary Lucy Rigby told MPs that the government’s approach to alcohol duty was one of proportionality: “The measures in the Bill take account of the important contribution of alcohol producers, pubs and the wider hospitality sector, the government’s commitments to back British businesses, and the need to maintain the health of the public finances.”

Dave Doogan (SNP) questioned the ‘fairness’ of the changes in this clause, given “all the other taxes… [that are] currently killing hospitality businesses”. He stated that “if the Labour government genuinely value industry in Scotland beyond the grasping hand of the Treasury, they should work with us to amend or remove clause 86”.

The Economic Secretary replied that the government is supporting British pubs and the wider hospitality sector, including through the introduction of the new pro-growth licensing policy framework. She believed that “continuing to freeze alcohol duty would primarily support cheaper alcohol in the off‑trade… alcohol duty is paid by producers, not by pubs, and 73% of alcohol consumed in the UK is purchased from shops.”

Conservative shadow minister James Wild opposed the rise in alcohol duty. Introducing his party’s new clause 26 he accused the government of “putting more cost on to people and businesses” when they [government] say that addressing the cost of living is their priority.”

Laurence Turner (Lab) welcomed the direction of the policy. However he suggested that “something needs to be done about the sale of high-strength drinks on our high streets in proximity to betting shops”. He hoped that future exercises would look at different treatments, “whether that is powers for local authorities or changes to the tax system to try to remedy the problem”.

Liberal Democrat MPs, including Daisy Cooper, Calum Miller, Al Pinkerton and Paul Kohler, emphasised the role the hospitality sector plays in the community. Cooper raised concerns about the impact of revaluation on business rates bills, especially for pubs, and asked when ministers had seen the VOA’s information on valuations. Kohler highlighted the party’s call for an ‘emergency’ temporary VAT cut for the hospitality sector, reform of business rates and “a proper review of the unworkable wine duty system”.

Jacob Collier (Lab) believed that alcohol duty must work “in favour of pubs” noting that the tax system makes it cheaper to buy alcohol in bulk from a supermarket than to go down the local pub. He encouraged ministers to read a letter from the all-party parliamentary beer group which calls for this.

Another Labour MP, Gareth Snell, highlighted the differential between cider rates and beer rates and suggested that it is “unfair” that a small brewery in the UK will pay more in duty on the pints it produces than a global cider manufacturer, because of the differential points at which the relief comes in.

Robbie Moore (Con) cited the British Beer and Pub Association, which claims Britain has the third-highest level of tax in Europe when it comes to drinking a pint in a pub.

Responding to the debate, the minister said uprate alcohol duty in line with RPI was a “prudent and responsible” decision. She said that because this uprating maintains the real-terms value of the duty, the government do not expect it to have significant macroeconomic impacts, whether on the employment rate or hospitality businesses’ costs.

On the Lib Dem call for a temporary VAT cut for hospitality, she said “if we want to cut taxes, the money has to come from somewhere.” She said the government would come forward with a support package for hospitality “when we are able to do so”.

There were three divisions on this group: clause 86 (inflationary increase to alcohol duty) passed 344-173; Lib Dem new clause 9 (review of impact on hospitality sector) was defeated 181-335; Conservative new clause 26 (statements on increasing alcohol duty) was defeated 172-334.